Wisdom Education International Holdings Company Limited Recorded A 5.1% Miss On Revenue: Analysts Are Revisiting Their Models

Investors in Wisdom Education International Holdings Company Limited (HKG:6068) had a good week, as its shares rose 8.2% to close at HK$3.70 following the release of its yearly results. Wisdom Education International Holdings missed revenue estimates by 5.1%, with sales of CN¥1.8b, although statutory earnings per share (EPS) of CN¥0.25 beat expectations, coming in 3.6% ahead of analyst estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Wisdom Education International Holdings after the latest results.

See our latest analysis for Wisdom Education International Holdings

Taking into account the latest results, the most recent consensus for Wisdom Education International Holdings from twelve analysts is for revenues of CN¥2.29b in 2021 which, if met, would be a major 28% increase on its sales over the past 12 months. Statutory earnings per share are predicted to swell 13% to CN¥0.28. In the lead-up to this report, the analysts had been modelling revenues of CN¥2.36b and earnings per share (EPS) of CN¥0.30 in 2021. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The analysts made no major changes to their price target of CN¥3.96, suggesting the downgrades are not expected to have a long-term impact on Wisdom Education International Holdings' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Wisdom Education International Holdings, with the most bullish analyst valuing it at CN¥5.79 and the most bearish at CN¥2.62 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Wisdom Education International Holdings'historical trends, as next year's 28% revenue growth is roughly in line with 24% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 21% per year. So although Wisdom Education International Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at CN¥3.96, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Wisdom Education International Holdings going out to 2023, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 4 warning signs for Wisdom Education International Holdings that you need to be mindful of.

If you’re looking to trade Wisdom Education International Holdings, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.